FTSE falls as UK inflation rises

After two days of gains, the FTSE is heading lower, dragged down by recession fears, and as UK inflation rises to s fresh 40-year high.

UK CPI rose to 9.1% YoY in May, in line with forecasts, with food, energy and record petrol prices lifting inflation. Core CPI, rose by a less than expected 5.9%, down from 6.2% in April and below forecasts of 6%.

The data comes amid the worsening cost of living crisis and as the UK experiences its largest train strike in 30 years. Workers across more sectors of the economy are expected to strike over the summer.

UK economic growth is already stalling, strikes are likely to see growth slow further.

Oil prices are also falling sharply lower on recession fears, which will drag heavyweight oil majors’ southwards.

Where next for the FTSE?

After running into resistance at 7650 at the start of the month, the FTSE has rebounded lower, falling below the 50 and 100 sma. The 50 sma is also crossing below the 100 sma in a bearish signal and the RSI also supports more downside whilst it remains out of oversold territory.

Sellers will look for a move below 6966 the June low and November low to extend the bearish trend towards 6764 the 2022 low.

Buyers will look for a move over 7160 the May 13 low and 7190 the weekly high to create a higher high and head towards 7225 the May 19 low and 7326 the June 16 high.

Oil tumbles ahead of Powell

Crude oil is tanking lower ahead of Jerome Powell’s testimony before Congress. Recession fears and a stronger USD are pulling on oil prices.

Fed Powell is expected to outlay the central bank’s strategy for tacking inflation. The market will be searching for clues on whether the Fed will hike by a further 75 basis points in July after hiking by 75 basis points in June, which could further fuel recession fears.

President Joe Biden is also expected to announce a federal tax holiday on gasoline prices.

API crude oil stockpile data is due later.

Where next for WTI oil?

After running into resistance at 121.98 in mid-June, oil prices rebounded lower falling below the 50 sma and the multi-month rising trendline.

The price is currently testing the 100 sma, and the RSI is bearish below 50.

Sellers need to break below 103.75 the 100 sma and the May 19 low to extend the selloff towards 100.00 the psychological level.

Buyers will be looking for a move over 109.50 the 50 sma to open the door to 116.20 the March 24 high.

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